Happy New Year?

Like the Chinese, accountants think in terms of a different year than the one that starts on 1 January. On 6 April each year, everything tax-related changes and a whole new set of tax rates, rules and allowances need to be considered.
This year’s Budget is on 21 March and although there may not be any announcements that have an immediate impact, you can never be sure if a major last-minute change will hit the headlines. The usual changes to the everyday rates and allowances were announced last year and these are as follows-
The tax-free personal allowance will increase by £630 to £8,105. This is the threshold that the Lib-Dems would like to see increased to £10,000, so fingers crossed. The higher allowances for people over 65 are also increasing but by slightly lower amounts.
The 20% income tax band will reduce by £630 to £34,370 to maintain the 40% tax threshold at £42,475.
National Insurance rates are set to stay the same but people can earn an extra £7 per week/ £364 per year before paying it.
Company tax, known as corporation tax, is reducing by 1% to 25% although the small company rate remains at 20%.
Already many politicians from both sides of the House are pressing George Osborne to cut all sorts of taxes in the Budget – corporation tax to help companies grow and pay their other bills, vat to encourage consumers to spend and personal tax for the same reason as well as to help people struggling in these hard times. It remains to be seen if the Chancellor will feel able to do any of this – while Chancellors like to announce tax cuts, with the huge Budget Deficit he may feel his hands are tied and the government needs to claw in every penny.

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